Senior bankers and financial experts said this week Sri Lanka must move from a savers nation towards an investors nation to develop its financial markets and economy.
At a media briefing to launch WealthTrust Corporation (Pvt) Ltd, a fund management company headed by leading bankers and experts in finance, WealthTrust is aiming towards managing client funds with proper systems, controls and liquidity in safe government securities. Chairman of WealthTrust Ranjith Fernando, the former Director/CEO of NDB Bank, said banks offering interest rates of 12% to 14% on deposits means depositors end up losing because coupled with inflation, the real interest rate is negative. Finance companies which offer interest rates between 20% to 30% may be attractive to investors but the risks are enormous, as evident by recent scandals such as Sakvithi. However, people still opt for finance companies over banks due to the higher rates. Mr. Fernando said the intermediate position comes in the form of fund management such as WealthTrust, offering higher rates than banks and with minimal risk.
Sri Lanka is heavily dependent on the banking sector for economic development which could lead to financial instability. The domestic savings ratio is around 17.7% of GDP which is very low while at the same time, Sri Lanka has high intermediary costs at approximately 7.7%, stifling the private sector. WealthTrust is positioning itself as a way to develop the country's financial markets.
WealthTrust Executive Director Mangala Boyagoda said the reasons savers are getting negative returns is a lack of awareness. "People know how to earn but they don't know how to save," he said.
WealthTrust is planning on educating and helping people manage their debt and equity funds. Investors have to be more active and can choose where to invest their money depending on their needs.
This marks a shift from a more traditional way of saving. WealthTrust will cater to a range of clients with large and small deposits. An investment plan will be signed with each client who will receive a monthly statement and will be able to track the status of their funds 24 hours a day through the Internet. WealthTrust will also benchmark its performance by earning each client a certain return or perform above that. The company plans to spread its services into rural areas. The Board of Directors are Chairman Ranjith Fernando, Executive Director Mangala Boyagoda, and Directors - Dr. Wickrema Weerasooria and Eastman Narangoda.
|
E-mail